In May 2022, the National Trading Standards enforced the first of their three directives, known as part A, which covers material information for property listings. Created to protect and inform prospective tenants and buyers when searching for a property, these material information guidelines remind property professionals, such as agents, not to willingly exclude specific information in property listings.
Recent updates to these material information guidelines have seen details for parts B and C released. These additional requirements will further govern the way that property professionals list and advertise a property, specifically around which information is mandatory to include.
In this blog we’ll outline the background of regulating listings in the UK, delve deeper into each of the three parts and look at what implications updates B and C will have for lettings agents and other property professionals.
An overview of material information
Different laws have been introduced in the last few decades to prevent misleading property descriptions. Each has left questions unanswered despite intending to create a fairer landscape for those looking to buy or rent a property.
The Property Misdescriptions Act
The Property Misdescriptions Act 1991 (PMA) made it a criminal offence to provide false information in 33 predefined areas. Created to clarify and protect consumers seeking a new home, it had an unintended result. It ultimately disadvantaged prospective buyers or tenants and put pressure on property professionals, because few agents wanted to inadvertently list inaccurate or misleading information, according to one RICS article.
Therefore, property listings became sparse in terms of detail and did not give the level of information required by the public.
The Consumer Protection from Unfair Trading Regulations
Introduced 17 years after 1991’s Property Misdescriptions Act, the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) became the law that agents have to follow. The previous PMA legislation was repealed on 1st October 2013, with this new trading law seen as the solution to misleading information, including property listings.
However, whilst it established the legal notion of ‘material information’ it fell short of defining this concept in practical areas. Unlike the PMA, it did not specify a list of factors to conform to and could therefore be seen as confusing the situation.
Instead, the National Trading Standards’ definition of material information states that any unfair information that would otherwise impact a decision made by a consumer in relation to a property, like arranging a property viewing or putting in an offer to rent and going ahead with any other aspect of the process should be avoided. This can be negative or positive in nature, such as consciously misleading or omitting information within a property listing to make it more attractive to the public.
What is material information in 2023
Today, the National Trading Standards Estate and Letting Agency Team (NTSELAT) has been working towards establishing a fairer set of definitions regarding which information is governed under the concept of material information. This is to ensure consistency across the sector.
Cooperating with major property portals that include OnTheMarket, Zoopla and Rightmove, it aims to harness the technology of these and other platforms to regulate how agents describe a property. But there is also work to be done within printed brochures and agents’ websites.
This collaborative effort has sought to clarify the position and guide the approach of agents and other professionals, especially as different properties will be unique and consumers may expect different information. It has been agreed that three parts are to be introduced to shape the listings process, which we will explore next.
What is Part A?
The National Trading Standards website defines Part A of its three-part update towards the concept of material information. Already implemented since the close of May 2022, it reveals that this stage will require all property listings to include information that, “regardless of outcome, is always considered material for all properties regardless of location. This information generally involves unavoidable costs that will be incurred by the occupier regardless of the use of the property”.
Part A has been broken down into three aspects:
1. Tenure (for sales property listings)
If a property is classed as freehold it must be disclosed as ‘freehold’. If it is leasehold, it must be noted that it is ‘leasehold’ and state the current ground rent beside any review period, any current service charge information and the length of the lease.
Shared ownership property listings, where the buyer only purchases a percentage of a property, need to disclose the exact share that’s being offered for sale. There is a need to include any additional liabilities or obligations. Equally, if the property for sale is commonhold, this must be disclosed as ‘commonhold’.
2. Council Tax or Property Rates
Although these costs have different names depending on the location of the property, the National Trading Standards scheme specifies that its council tax band (in England, Scotland and Wales) or property rates (in Northern Ireland) must be disclosed within the listing.
3. The Asking Price or Rent
These guidelines vary depending on whether the property is advertised for sale or rent. Property listings must disclose the price “expressed as a numerical figure” where a property is being marketed for sale.
This reflects the view held by the National Trading Standards, which views the POA (or price on application) method as “unlawful” as it “contravenes consumer protection legislation” and withholds the asking price from the buyer. After all, the asking price is key information that the majority of buyers will require before making an enquiry.
Listings that concern rental properties must include the monthly rent and any initial deposit that renters will be required to pay.
Updates to Part B and Part C
In June 2023, it was announced by James Munro of NTSELAT, that parts B and C of the material information rules are to come into force.
“This year, in early Autumn, I am told we will start seeing early stages of information on utilities, building safety issues and flood risks”Munro stated, heralding the start of phase two of the intended updates.
Part B material information is information that must be shared by agents for every property they deal with. As National Trading Standards revealed: “(Part B) applies mainly to utilities and similar, where non-standard features would affect someone’s decision to look any further at that property.” Examples of this content include the property’s parking, construction and utilities options.
Part C guidelines require agents to include “Additional material information that may or may not need to be established, depending on whether the property is affected or impacted by the information.”
This applies to “properties affected by the issue itself because of, for example, the location of the property” and will support buyers/renters in their search for a home. Examples of this content include conservation area inclusion, listed status, easements, building safety and whether the home is on a known flood plain.
What does this mean for property professionals?
These directives look set to improve the industry for consumers, and property professionals will be given advice to help them meet these new directives. However, these changes will bring potential advantages and disadvantages for those working in the industry.
With these changes earning support from the Government as part of its Levelling Up agenda, indicating that similar legislation may be passed, agents need to update any property listings that fall short.
National Trading Standards manages investigations into trading standard offences, so it is wise for agents to comply with the CPRs as well as the three-part developments to meet their material information obligations.
However this situation is also ripe with positive opportunities for agents according to Beth Rudolf, The Conveyancing Association’s Director of Delivery, noting that part A has already had an impact. She believes there are “massive benefits, not just in financial terms with increased pipeline turn and time and money saved, but in driving a faster more efficient and less stressful process for everyone.”
Highlighting that such practices have already reduced the number of fall throughs by 60% in Scotland, and merited higher fees with happier clients in Norway, these directives look set to boost agents’ reputation, efficiency and profitability.
It is expected that conveyancers comply with these directives to protect buyers as they are then less likely to pull out, in the event that information was witheld and the buyer had known prior to contacting the agent or booking a viewing. As with agents, conveyancing professionals need to be aware that the CPRs can already result in sentences of two years in prison in worse case scenarios, or advisory visits, letters and unlimited fines.
There have also been concerns that the traditional remit of conveyancers is becoming increasingly part of an estate agent’s role. However, it seems more probable that there will be a change in the selling timeline instead. The requirement for material information to be disclosed earlier in the marketing of a property creates opportunities for conveyancers to be involved from a much earlier stage.
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